Tax plan becomes effective per 1 January

September 26, 2011 7:45 AM

Yesterday the Parliament approved the tax plan from the Schotte-cabinet. The main issue in this plan is the increase of the sales tax (OB) from 5 to 6 percent.

The local trade union organizations, assembled in Plataforma Sindikla, had urged the government to withdraw the increase. However, during yesterday’s meeting, Minister of Finance George ‘Jorge’ Jamaloodin (MFK) indicated this was impossible.

The trade unions believe that the increase will have considerable consequences for the population, in particular the workings class. They point out that in practice the increase from 5 to 6 percent will amount to an increase of 20 percent. However, Jamaloodin repudiated this yesterday. According to the Minister, the 20 percent is incorrect and the increase will amount to only 1 percent. During his presentation, the Minister emphasized the tax plan consists of several parts. Apart from the OB-increase, the tax on profits and income tax will go down. These adjustments will become effective per January 1st 2012. Furthermore, the excise on gasoline will go down, the import duties on low sulphur diesel will disappear, while those in receipt of relief and pensioner, having to manage on an allowance, will receive an additional three percent. The Minister described the plan yesterday as step 1 in the tax reformation on the island. This reformation is necessary because Curaçao has one of the highest tax rates in the region.

The main point in the plan, according to Jamaloodin, is that on balance the citizens will end up having more money. According to the MFK-Minister, with the tax plan nobody will be worse off, while the financially weak will even be better off financially. The macro-economic consequences of the tax plan are positive too, says the Minister. The Gross National Product, just like the investments, the private consumption and the employment will rise, while the unemployment will go down, Jamaloodin figured out for the States members. Although the revenues from the OB will increase with 65 million, on balance this will not lead to more revenues for the government. Due to the decrease of the income tax and tax on profits and the excise on gasoline, the government will be confronted with a loss of 7 million guilders. Extra increased controls by the Tax Accountant Bureau (BAB) will compensate this loss.

During the meeting, it appeared the coalition and opposition had differing opinions on the tax plan, in particular on the increase of the sales tax. During his speech, Dean Rozier (MFK) emphasized the plan encompasses more than an increase of the OB. However, he pointed out that important expenditure entries such as water, electricity and rent, were exempted from OB. According to Rozier, in its entirety, the tax plan is good for the Curaçao community. However, Glenn Sulvaran (PAR) stated that the tax increase would really affect the local consumer considerably. He figured out that the inflation could rise up to 8 percent due to the increase together with the earlier announced increase of fuel prices, the rise of food prices and the redoubling of the license fee announced by the PS.

PNP-member Humphrey Davelaar stated he could support the tax plan if there was no increase of the OB. According to Davelaar, he requested the Minister and the government several times to abandon the increase, but they had not complied with his request. The PNP-member had also suggested the Minister abandon the increase because the budget for next year mentions a surplus of 47 million guilders. However, this proposal was ignored. PS-leader Helmin Wiels found it remarkable that the PAR-party had sided with the trade union’s request. Since when is the PAR concerned about the interest of the trade unions and the working class, he wondered. This was an example of cheap politics, according to Wiels. Eunice Eisden (MAN) emphasized that governing a country is a matter of choices between pleasant and less pleasant things. The excise reduction was pleasant and the OB-increase wasn’t, but the reduction was done to compensate the increase.
Eventually the time had come to take a vote. The coalition parties voted in favor while the PAR and PNP-member Davelaar gave a dissenting vote. FOL-leader Godett was not present during the meeting.

16 September 2011